Saturday, December 22, 2007

Porsche and VW: One happy family?

WOLFGANG PORSCHE still chafes at the memory of being told, as a 7-year-old, that he could not attend the 75th birthday party of Ferdinand Porsche, his grandfather and the family patriarch.

It was a glittering affair, celebrating the man who designed the forerunner of the Volkswagen Beetle and laid the groundwork for one of Germany's mightiest industrial empires. For young Wolfgang, it would have been a precious chance to see a beloved but often absent figure. Four months after the party, in January 1951, Ferdinand was dead.

Now, nearly six decades later, Wolfgang Porsche is the one making family history: he stands on the brink of uniting Volkswagen with Porsche, the elite sports-car maker founded by his grandfather and built by his father, Ferry Porsche.

It seems a bizarre mismatch: the Beetle, an enduring symbol of mobility for the masses, sharing the same garage as the 911 Turbo, the ultimate totem of privilege for Beverly Hills plastic surgeons, Russian oligarchs and anyone else with a need for speed, and $125,000 to burn.

Porsche's takeover — which began with a surprise 20 percent investment in 2005 and is likely to be completed with a majority stake next year — has inspired all sorts of bromides in the German news media: a David-and-Goliath tale, an audacious power play, a collision of mass and class.

At its heart, though, it represents a closing of the circle for one of Europe's great automotive dynasties.

"We're just a small automaker from Stuttgart, and now we're going to be one of the largest automobile companies in the world," said Porsche, a cordial, soft-spoken 64-year-old who as chairman of Porsche's supervisory board is the current leader of this sprawling German-Austrian family.

Not that he wants to be seen as taking over a $150 billion company, 14 times the size of Porsche, on sentimental grounds.

"My father and my grandfather would have been very pleased to see this, but that wasn't the reason we did it," Porsche said at Porsche's headquarters in a rare interview. "It's a nice side effect."

Porsche, he said, needed to bring Volkswagen into the fold to ensure that others do not get their hands on it. The two carmakers already collaborate in building sport utility vehicles and in developing hybrid engines. Porsche plans to use a Volkswagen assembly plant to stamp out the body of its eagerly awaited four-door sedan, the Panamera, due in 2009.

The takeover, which was the brainchild of Porsche's chief executive, Wendelin Wiedeking, is intended to lock in that partnership. By acting when it did, Porsche headed off private equity investors, which it says were circling Volkswagen in 2005.

Bluff, opinionated and combative, Wiedeking is the public face of Porsche. But Porsche is the behind-the-scenes power — a gentleman hunter and painter who has a business degree and hands-on car experience at Daimler-Benz, where he worked as a controller from 1976 to 1981.

THE youngest of Ferry Porsche's four sons, Wolfgang was overshadowed by his eldest brother, Ferdinand Alexander, who designed the 911. But with his brother now in poor health, Wolfgang speaks for a family whose fortune is worth well over $20 billion.